How To Start A Charity

What’s your passion? Save the world? Save the whales? In post-recessionary times, many people leave the corporate world and create new business start-ups. Later most of these business owners thank their “misfortune” and happily go on to build a legacy for themselves and future generations. But these times are not only good for starting “for-profit” enterprises; they’re also good for starting non-profits. Here are some easy steps to start a charity.

Start by developing your vision and mission

A vision is an inspiration and aspirational destination on the horizon. It should not include quantitative measures but descriptions of what you want to create. The mission is a more concrete description of purpose and intent. It is a clear and concise expression of the basic purpose of the organization: what it does, for whom, and what is the basic service. Missions should be complemented with specific, measureable, achievable, and challenging goals. Also you should develop a set of values, the beacon by which your organization will be led.

Next you need a name

Charities are organizations by design but require philanthropy for support—and people like to donate to people. So names can describe the function of the organization (e.g., The American Cancer Society), but many successful organizations are named for people (e.g., Susan G. Komen for the Cure, The Jimmy Fund, etc.). Names of organizations in memory of specific people but with a mission to help others may encourage donations.

According to The National Center for Charitable Statistics (NCCS) there are over 1.5 million nonprofitorganizations in the U.S. Many organizations compete with one another for funding to support the same cause. So you have to clearly differentiate your organization and hopefully stimulate the same kind of passion in potential donors to your charity that you have for it yourself.

Write a plan

Part of your plan, of course, is your vision, mission, name, and point of differentiation. But you should then layout a five-year plan of strategies and tactics including fundraising strategy, operational strategies, budget, etc.

Register as a 501(c)(3)

This refers to the IRS code that allows you to operate as a nonprofit, tax-exempt organization. Be sure to have a lawyer and accountant with nonprofit experience advise you on the proper steps to register and operate so you don’t run afoul with government rules. A lot of information can be found online.

You can announce your inspiration, intentions, plan outlines, etc. all on your website and begin fundraising using the site as the primary tool. You can seek contacts for donations via the site. It is not recommended that you put complete business plans or financials on the site. People can contact you to get more information from you.

Of course you can put your own funds into the charity. But usually you will need to raise support from others. This can include friends or relatives, but normally will need broader support from grassroots organizations, individuals, and foundations. Once your plans are complete you should make contact with grant-making organizations that are focused on areas that include your mission. Expect to make a significant number of calls, meetings, and presentations. Don’t be discouraged. This will take significant time and energy. It must be conducted in a professional and disciplined fashion. Many websites exist that teach you techniques of fundraising. Develop significant activity through Facebook, Twitter, LinkedIn and other social media sites.

Establish an Advisory Board

Initially this should be a handful of people with significant nonprofit experience (including financial and fundraising experience) who can help you launch. Ideally they should available real time as resources to you and should meet more formally weekly or monthly until operations are established. Once the charity is up and running, the board should be expanded to include significant donors, potential donors, and people with significant fundraising contacts. Be careful not to let the board get too big and watch out for big egos that can destroy an organization. A good board size for mature charities is around twenty individuals. Board positions should be unpaid, of course.

Begin operations

It is recommended that you have cash raised to fund initial capital requirements and at least a year of operating funds before committing any cash outflow. Using debt to start an organization is not recommended. Remember to treat every dollar you spend as if it is your last dollar. In other words, be frugal. You need to stretch your dollars as far as possible. Also, many organizations forget that spending is supposed to go to the mission of the organization, not into the pockets of the people who work there.

Keep your spending efficient

While in time you may need to hire professional help, be very cautious about spending. A rule of thumb is that nonprofits should spend 80%+ on program expenditures and 20% or less on administration and fundraising. In fact, often more efficient organizations (higher ratio of program to administrative spending) have the easiest time fundraising. Donors want their money to go to the ultimate beneficiaries not the employees.

Be patient

Hopefully you want to help the maximum number of people possible. But you won’t be able to help for long unless you engineer your organization for longevity. This means expanding only at a rate that is supported by your fundraising. Take your time. Every organization started somewhere but they are what they are through discipline. Survival is key and this requires patience.

Of course, rule number one for starting anything is that you have to have a passion for what you’re doing. After all, startups are a lot of work. There will be times when you question your sanity for having tried this and it will be the passion that carries you through. It is unwise to start anything with the goal of fortune and fame, especially nonprofits. Expect to invest significant amounts of time, passion, and money with great satisfaction as the only reward. So pour yourself into your passion and create a legacy while helping others.